SHO Filings — Sunstone Hotel Investors, Inc. - FilingSpy
SHO
Sunstone Hotel Investors, Inc.
A lodging REIT that owns upper-upscale and luxury hotels — roughly a dozen-and-a-half properties across seven states and Washington, DC, operated under familiar names like Marriott, Hyatt, Hilton, and Four Seasons by outside managers. Hotelier Robert Alter started it in California as Capstone Properties in the late 1980s, but when he took the company public in 1995 he had to pick a new name because "Capstone" was already taken — so it became Sunstone.
Sunstone Q2 net income rose 142% to $26.2M as the Andaz Miami Beach ramp-up and Comparable Portfolio RevPAR growth of 4.3% lifted results.
The Andaz Miami Beach is now contributing meaningfully, and the core portfolio found pricing power. rose 6.7% to $277.1 million and climbed 142% to $26.2 million as Comparable Portfolio grew 4.3% on higher occupancy and average daily rate, while the reopened Andaz added $7.6 million in room revenue. The recovery is taking hold, but rising debt and a $1.6 million storm at Wailea Beach Resort add cost pressures to watch.
Key takeaways
rose 141.6% to $26.0 million, driven by growth across the portfolio and a $2.1 million noncash gain on interest rate derivatives that reduced .
Comparable Portfolio increased 4.3%, with both occupancy and average daily rate rising, led by strength at Wailea Beach Resort and Hyatt Regency San Francisco.
The Andaz Miami Beach, which reopened in May 2025 after its conversion, contributed $7.6 million in room and $5.1 million in during the quarter.
Section summaries
Management's Discussion and Analysis
Q2 2026 net income attributable to common stockholders rose 279.7% to $26.0M, driven by RevPAR growth, Andaz Miami Beach reopening, and lower interest expense.
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Total revenues grew 6.7% to $277.1M, with Comparable Portfolio up 4.3% on higher occupancy and , led by Wailea Beach Resort and Hyatt Regency San Francisco.
Hotel operating expenses rose 5.1% to $163.3 million, reflecting higher occupancy, increased property taxes, and new labor agreements at the Hyatt Regency San Francisco.
The company recorded a $1.6 million on storm-damaged assets at Wailea Beach Resort, partially offset by $2.4 million in property insurance recoveries.
rose to $968.4 million, up 11.5% , after a $90 million term loan draw used to repay senior notes and fund $40.6 million in common stock repurchases.
What changed
The Comparable Portfolio's average daily rate increased this quarter after declining for multiple consecutive periods; the Q1 2026 filing flagged whether the ADR gain was a one-time Super Bowl lift, and the Q2 result suggests the improvement is holding.
The Andaz Miami Beach's contribution moderated from $12.6 million in room in Q1 2026 to $7.6 million in Q2, as the initial reopening increase normalized, consistent with the watch item from Q1 that asked whether growth would taper as the property laps its ramp-up.
Hotel operating expense growth decelerated from 7.4% in Q1 2026 to 5.1% in Q2, though new labor agreements at Hyatt Regency San Francisco and higher property taxes continue to add pressure, partially addressing the Q1 concern about whether cost increases were transitory.
The $1.6 million storm at Wailea Beach Resort is a new development not flagged in prior filings, introducing a physical-damage risk to a property that had been a source of Comparable Portfolio strength.
What to watch
Whether the Comparable Portfolio's average daily rate growth can be sustained into the seasonally slower second half of 2026, or whether the pricing power evident in Q2 fades as the Super Bowl comparison drops out.
The trajectory of , which reached $968.4 million, and whether further share repurchases or term loan draws push higher, given that 40.8% of debt remains floating-rate and a 50-basis-point rate move now affects annual by $2.0 million.
The extent of additional storm-related costs or insurance recoveries at Wailea Beach Resort beyond the $1.6 million and $2.4 million in recoveries already recognized.
Whether the Andaz Miami Beach can sustain its $5.1 million quarterly contribution as it moves past the initial post-renovation ramp-up and into a more mature operating phase.
Andaz Miami Beach, reopened in May 2025 after renovation, contributed $7.6M in room and $5.1M in in Q2 2026.
Hotel operating expenses rose 5.1% to $163.3M, driven by higher occupancy, property taxes, and new labor agreements at Hyatt Regency San Francisco.
fell 10.5% to $11.8M due to a $2.1M noncash gain on derivatives, partially offset by higher debt balances and lower .
Net was $107.4M for H1 2026; the company drew $90M on a term loan and repurchased $40.6M in common stock and $28.2M in preferred stock.
The company recorded a $1.6M for storm-damaged assets at Wailea Beach Resort and recognized $2.4M in property insurance recoveries.
Quantitative and Qualitative Disclosures About Market Risk
To the extent that we incur debt with variable interest rates, our future income, cash flows and fair values relevant to financial instruments are dependent upon prevailing market interest rates. Market risk refers to the risk of loss from adverse changes in market prices and…
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To the extent that we incur debt with variable interest rates, our future income, cash flows and fair values relevant to financial instruments are dependent upon prevailing market interest rates. Market risk refers to the risk of loss from adverse changes in market prices and interest rates. We use interest rate derivatives to manage our exposure to the interest rate risks related to our floating rate debt. We have no derivative financial instruments held for trading purposes.
As of June 30, 2026, 59.2% of our debt obligations were fixed in nature or were subject to interest rate swap derivatives, which mitigates the effect of changes in interest rates on our cash interest payments. If the market rate of interest on our variable rate debt increases or decreases by 50 basis points, interest expense on an annualized basis would increase or decrease, respectively, by approximately $2.0 million based on the amount of variable rate debt outstanding at June 30, 2026.
There have been no material changes from the risk factors previously disclosed in Part I, Item 1A, “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2025, filed with the Securities and Exchange Commission on February 27, 2026.
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There have been no material changes from the risk factors previously disclosed in Part I, Item 1A, “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2025, filed with the Securities and Exchange Commission on February 27, 2026.